Honda Motor and GAC Group have agreed to extend their joint venture GAC Honda Automobile through 2038, the companies announced on Sunday. The extension, signed in early July, adds 10 years to the partnership and aims to strengthen operations in China, the world's largest auto market, as the industry shifts toward electrification and smart technologies.
The renewal comes as Honda faces mounting headwinds in China. GAC Honda, which produces and sells gasoline and electric vehicles, sold 340,000 units last year — a 26% decline from the prior year and roughly 60% below its 2020 peak. Honda has suspended operations at its Huangpu plant in Guangzhou, which has annual capacity of 240,000 vehicles, from July 2026.
Honda said it will continue offering products that meet diverse needs to further bolster its four-wheel business in China. The extension will not materially affect Honda's financial results for the fiscal year ending March 2027. GAC Honda, established in 1998 as Honda's first Chinese joint venture, has sold over 11 million vehicles since production began in 1999.